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The 2016 election cycle is in full swing, and major changes to the financial services regulatory landscape, including the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB), could turn on the outcome of the election. Whether your company wants to play a role in the election or your executives are personally supporting candidates, it’s important to understand the rules.

The Federal Election Commission recently concluded an investigation into contributions from a Canadian citizen to a candidate for governor. Why would the FEC investigate a state contribution? Because the ban on contributions from foreign nationals applies not just to federal candidates, but to state and local candidates as well.

The FEC dismissed the case because the state candidate did not know the contributions were illegal. In fact, he had checked with state election officials, who told him there was no issue under state law. There wasn’t, but there was an issue under federal law.

Foreign nationals are individuals who are not U.S. citizens or non-citizens who do not have permanent resident (i.e., green card) status, as well as any companies incorporated, organized, or located abroad. U.S. citizens living in other countries are permitted to contribute.

As we get closer and closer to the elections, candidates will be working harder and harder to raise money. One tried and true method is the fundraiser: an individual agrees to put together an event where his or her closest friends will make substantial contributions to the candidate, attend a breakfast, lunch, cocktails, or dinner, meet the candidate, and, if they contribute enough, get a picture with the candidate. While this may seem simple and straightforward, companies often get into trouble when they use their corporate resources to help put on fundraisers.

The largest fine in FEC history ($3.8 million) came as a result of corporate facilitation back in 2006. Others have followed. The FEC just unveiled an enforcement case involving a Nevada architectural firm that paid a substantial fine for using corporate resources to hold a fundraiser. The settlement provides a good example of how not to fundraise for federal candidates. …Continue Reading

January is always a busy month for filing lobbying and campaign finance reports. It is also a good time to think about changes for the upcoming year that might simplify filing obligations.

• State Lobbying Reports. Most states require year-end reports to be filed at some point in January. Many also require re-registration or renewal of registration for the next year. Pay attention to deadlines, and think about where you are likely to be active in 2016. Perhaps it is time to de-register or let your registration lapse if you will not be active in a particular state. Different states have different thresholds for when registration and reporting are required, so be sure to consider how what you are doing matches what is required.…Continue Reading

This week, the U.S. Court of Appeals for the D.C. Circuit upheld the Federal Election Campaign Act’s long-standing ban on contributions from federal government contractors to federal candidates and parties. We have followed the case since the District Court’s decision in 2012.

The ban has been in a place since 1940. Pointing to a history of federal and state corruption scandals involving government contracts, the court ruled that the ban continues to further the government’s interest in preventing quid pro quo corruption and removes political pressure on government employees. Some of the most important things about the ruling for government contractors are: …Continue Reading

Last week the U.S. Ninth Circuit Court of Appeals upheld key provisions of Hawaii’s campaign finance laws requiring a for-profit company making campaign contributions and expenditures to register as a political committee, and prohibiting government contractors from contributing to state legislators and candidates.

Broad Implications for Companies and Nonprofits Participating in Hawaii Elections

In January 2010 – as almost everyone already knows by now – the Supreme Court struck down major portions of campaign finance laws, allowing corporations to make independent expenditures in support of, or opposition to, candidates for federal office. Super PACs that could accept unlimited individual and corporate contributions soon followed based on lower court…

The U.S. Department of Justice has announced the first criminal prosecution for a violation of federal laws prohibiting outside groups from coordinating their activities with the candidates and campaigns they support.

The six-member Federal Election Commission, which is primarily responsible for interpreting and enforcing federal campaign finance laws, has deadlocked repeatedly over whether to investigate complaints of coordination. But with this announcement, the Justice Department, which may pursue knowing and willful violations of the same laws, has stepped into the breach.

In the plea agreement, a Virginia-based political consultant admitted serving as campaign manager for a U.S. candidate for Congress, while at the same time operating a Super PAC that spent $325,000 on ads attacking that candidate’s opponent. No one else has been charged in the case. Interestingly, there is no indication in the charging documents that the candidate knew about the work the consultant was doing for the Super PAC. However, the coordination rules apply not just to candidates, but also to their staff, and in some circumstances, their volunteers. Violations may be established even if the candidate is unaware of a representative’s unlawful activity. …Continue Reading

The Washington Examinerrecently wrote about the art of naming a PAC, pointing out that the name must “balance patriotic with practical considerations.” The Examinertalked about making sure the name is not too long if the PAC will have to include “paid for by” statements on its ads. But there are some other legal considerations as well. Let’s look at some of the FEC’s naming rules.

If the PAC is a connected PAC, meaning it is supported by a company, union, nonprofit, or trade or professional association, then it must include the full name of the connected organization. We have seen registrations rejected by the FEC for failing to include “Inc.” or “Company” if that full legal name of the entity includes those signifiers. Thus, Widget Manufacturing Company of Our Town, Inc. must include all of those words in the name of the PAC. That name must appear in all legal disclaimers.

As it has done every two years since the Bipartisan Campaign Reform Act indexed contribution limits for inflation, the FEC has announced revised contribution limits for the 2016 election cycle. In addition to the traditional limits for candidates, PACs, and parties, the FEC also set the indexed limit for the new special accounts created at the end of 2014 for the national political parties. This first chart shows the limits for individual and PAC contributions to candidates, PACs, and state and local party committees:

This next chart shows the amounts that an individual may give to the national party committees. The general fund is the account that has always existed, while the other funds are the new accounts Congress created in 2014 to help the parties to defray certain costs:…Continue Reading